Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The companys controller, Will Fulton, has just received the sales forecast for the coming year for CTCs three products: hedge clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs over the past two years, and Fulton believes the forecast should be carefully evaluated from a cost-volume-profit viewpoint. The preliminary budget information for 20x2 follows:

	Weeders			Hedge Clippers			Leaf Blowers
Unit sales		50,000			50,000			100,000
Unit selling price	$	28		$	36		$	48
Variable manufacturing cost per unit		13			12			25
Variable selling cost per unit		5			4			6

For 20x2, CTCs fixed manufacturing overhead is budgeted at $2,000,000, and the companys fixed selling and administrative expenses are forecasted to be $600,000. CTC has a tax rate of 40 percent.

Problem 7-49 Part 1

Required:

Determine CTCs budgeted net income for 20x2.